Just Dial Limited (JD) is a local search
engines in India. It aims to provide fast, free, reliable and comprehensive
information to its users and connect buyers to sellers through multiple
platforms: Internet, mobile Internet, telephone (voice) and text (SMS).

As of March 31, 2013, its database
includes approximately 9.1 million listings. For fiscal year 2012, the company covered
over 254.3 million search requests across our platforms. It managed 195,100 advertisement
campaigns as of Dec 2012.

It commenced its business operation under brand name 'Just Dial' in 1996. The registered and corporate
office is located in Mumbai. It also has presence in Ahmedabad, Bengaluru,
Chandigarh, Chennai, Coimbatore, Delhi, Hyderabad, Jaipur, Kolkata and Pune.

Company’s USP

First mover advantage in local search market in
India

Strong business database and good brand recall

Beneficial for SME as it offers cost effective mode of customer targeting

Personalized relations with SMEs

Good understanding of and has hands-on
experience in Indian local market

Provides services across multiple platform

Business Model

The company follows a B2B model. It generates revenue in
form of listing fees from local businesses. These listings are featured among
the company’s search results (which it calls campaigns) on a priority basis. The
services are provided to consumers or end-users for free.

The company has profitable business operation
with PAT of 17.3% as of nine months ended Dec 31, 2012 and 18.3% as of financial
year 2012.

Its customer base majorly comprises of SME
client. The company has adopted model of advance payment from its client for
listing, as a result it enjoys negligible outstanding receivables.

The company is not dependent on external loans
for its growth

Critical Success Factors

Ability to scale up and to provide existing
services via new technological tools and increase the user base.

Efficient functioning of the website

Ability to protect its platform from being
misused.

Create brand recognition and enhance brand awareness

Regular updatation of the database of business
listing

Ability to customized product and services for
the local market

Risk

Low
barrier to entry: A new entrant with strong financial backing can easily start
similar business. Further, it also faces threat from Google India and and
Nokia’s city lens app.

No
exclusivity: Business enterprises and corporate that share information with
Just Dial are free to share information with other competitors and not bounded
by any exclusivity agreement.

Any adverse
economic cycle would reduce the availability of disposable income and accordingly
the business house may reduce its expenditure on advertisement with Just Dial.
Further, if there is a change in spending habits of the customer, then the user
base may also fall.

Strong Brand position, may have prospective
threat from any changes in Competition
Act, 2002, prohibits the abuse of dominant position by any company.

Any dissatisfaction
among its user may adversely affect user traffic on websites, which could
make it difficult to win back the customer’s trust.

The company faces competition from other local search engine like Askme.com, Asklaila.com, Sulekha.com, Getit.in.

Future Business Plan and Revenue Stream

Develop Mobile
Apps to provide search services. However, Justdial apps are currently available for Android, Blackberry and iOS platform

Enable booking
and processing of transaction through its website. The service would
include restaurant bookings, home delivery of food, placing groceries order, arranging
doctors’ appointments and taxi bookings. Some of the features of food delivery
and doctors’ appointment are currently available.

To ventures into online food delivery service through bookturbal.com

To offer space for buy, sell, rate goods and
services. It plans to initiate these services through Car listing. The services will be available for both- new and old
cars.

To provide prospective buyers price quotes from multiple vendors
through mail and SMS

Expand
geographic reach to USA and Canada through group company Just Dial, Inc. USA and Just Dial Global Private Limited (a holding company for Just Dial, Inc. USA). It also plans to expand its presence in other cities of India.

Funds raised and its utilization

The company offers 17,497,458 equity shares or
25.02% of its equity shares. Promoter VSS Mani and existing investors,
including SAIF Partners, Tiger Global, Sequoia Capital and SAP Ventures, would
be selling part of their holdings. The management and the promoter group will
sell around 2.8 million equity share and balance 14.7 million shares will be
sold by investors. As a result, the company will not receive any proceeds from
the offer.

The price bands are Rs 470-543 and the company would receive net proceeds in range of Rs.822-950 crores. Thus, the expected
market capitalization would be in the range of Rs 3,287-3,797 crore.

Further, 75% of the issue size has been reserved
for qualified institutional investors. 10% of the issue is reserved for retail
investors (those who invest up to Rs.2 lakh per application), would enjoy
benefit of 10% discount and balance 15% for HNIs.

Shares will be listed on BSE, NSE and MCX-SX

Protection to Investor

The Safety Net Scheme will operate for a period of 180 days
beginning from the date of listing and commencement of trading of the equity shares
on the Stock Exchanges (‘Safety Net Period’). The promoters of the Company - V.S.S.
Mani, Ramani Iyer and V. Krishnan, will jointly act as a safety net providers. All retail individual bidders to the issue who have received
allotment form the offer and are resident in India are eligible to benefit from
safety net scheme.

The safety net mechanisms will be triggered on completion of
the safety net period, if the safety net trigger price (to be computed as per weighted
average of share price and volume during 60 days before the trigger of safety
net scheme) is lower than the price at which the equity shares were allotted to
the retail individual in the Offer.On the occurrence of the safety net trigger, the safety net
providers will make an invitation to the eligible allottees to offer for sell the
equity shares allotted to them in the IPO offer.

Further, the safety net provision applies for investment below Rs. 50,000. So an individual may apply for 4 lots (i.e. 100 shares) at lower price band and 3 lots (i.e 75 shares) at higher price band to get protection under this scheme.

Valuation

The consolidated revenue from operating activities have
increased from Rs. 71.6 crores as of Mar 2008 to 277.02 crores as of Mar 2012,
registering a CAGR of 40.2%. During the same period, the profit after tax from
continuing activities has increased from Rs. 1.71 crores to 52.27 crores, a
CAGR of 135.1%.

The unconsolidated revenue and PAT for nine months ended
December 31, 2012 was Rs. 271.6 crores and 47.0 crores, respectively. Though
the company has grown at whooping pace during 2008-2012, the high growth may
also be attributed to lower base in earlier years. However, it is likely that
the company may not be able to replicate such high growth in future.

The basic and diluted weighted average EPS (2010-2012) computed
based on restated consolidated income statement was Rs. 6.72 and Rs. 6.05. So,
the PE computed based on diluted EPS would be 77.6x for lower price band and 89.7x
for higher price band. However the basic and diluted restated consolidated EPS
for 2012 was 9.37 and 8.13 respectively. Considering diluted EPS for 2012, the
PE would be 57.8x-66.7x. Further, there are no listed companies directly comparable to or operating in similar space as JD in India. So, based on the valuation, the IPO seems expensive.

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